Benchmarks

President Barack Obama met with business leaders Wednesday to discuss the fiscal cliff. Chief Executive Officers (CEOs) from Yahoo! Inc. (NASDAQ:YHOO), Caterpillar Inc. (NYSE:CAT), and other major companies met at the Whitehouse to provide their opinions on taxes and spending.

Markets reacted positively to remarks made by House Speaker John Boehner. The Speaker said that he was optimistic that a deal could be reached between Democrats and Republicans by the January 1st deadline. Equities have been on a rollercoaster the past several weeks after mixed signals were telegraphed from Washington.

Investors were buying retailer stocks; the service sector gained 0.90 percent. In an effort to avoid the potential for extra taxes on dividends next year, Costco Wholesale Corporation (NASDAQ:COST) announced a special $7.00 dividend. COST gained more than six percent during the session.

All of the sectors were higher. The Dow Jones Industrial Average (DJIA) advanced 106 points. The S&P 500 and NASDAQ were up 0.79 percent and 0.81 percent respectively.

Despite the flow of money into equities, the U.S. Treasury Department said that government note and bond prices increased; the higher prices drove yields lower. The 10-year note yield, a common benchmark for the conventional 30-year mortgage, fell one basis point to 1.63 percent (see the benchmark chart below).

Lenders followed the lead of Fannie Mae, but Freddie Mac bucked the trend. The Federal Home Loan Mortgage Corp (OTC:FMCC) raised their required net yield (RNY) rates.

The Federal Reserve said the economy remains in the doldrums. The central bank’s Beige Book reveled lagging factory activity and a stagnant economy.

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